Business Respect - CSR Dispatches No 63 - 28 Sep 2003

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An email newsletter with news and discussion focusing on corporate social responsibility globally, looking at the companies in the news and the emerging issues. Linked to the website at http://www.mallenbaker.net and produced every two weeks.

In this issue, we review events as the Asian Forum on CSR in Bangkok and the Ethical Corporation conference in Singapore.

In the news:

Feature articles on the internet:

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Topics:

Want to read a hyperlinked version of this issue? You can find one on the website at http://www.mallenbaker.net/csr/nl/63.html.

Copyright 2003 Mallen Baker. All rights reserved. For information on how to subscribe, go to http://www.mallenbaker.net/csr/nl/subscribe.html

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Welcome

It was a great privilege to attend the Asian Forum on CSR in Bangkok and to meet many of the great characters promoting the rise of social responsibility in Asia. Highlights undoubtedly included the presentation by Mechai Viravaidya (if we mention his nickname dozens of corporate email filters will automatically reject this issue!) whose inspiring history of development work with businesses in Thailand provided the best story of the event.

Mallen's breakout session turned out to be one of the few (actually we counted just two) that focused on business behaviour rather than on company investment in social issues. It was a lively session, focusing on how companies communicate with stakeholders, and had some good questions and discussion.

The Ethical Corporation conference in Singapore was very different in style and approach. See the article this time for some initial thoughts around both.

We have now taken off the website vote as promised last time. The final tally was:

When it comes to lobbying on matters of public policy, companies should:
Lobby away and / or pay donations - legislators are grown-ups 26 (6%)
Lobby and / or pay donations - but they must disclose what they do 253 (63%)
Do nothing - corporate lobbying should be banned 124 (31%)

403 people voted in all. Thanks as always to those who took part.

We now have a new vote on the website - in part inspired by the story this week about JJB Sports, but really focused on the dilemma faced by companies such as British American Tobacco and - before they caved in to the pressure - Talisman Energy, who operate in companies with controversial human rights situations. The vote runs like this:

In countries like Burma or Sudan where there are huge human rights challenges companies should:

Withdraw - no company with a conscience should do business there
Do business there - but use its influence to try to make things better
Do business there - and keep out of interfering in politics

We look forward to hearing your views!

Mallen Baker
Vanessa Wood
editors@mallenbaker.net

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CSR News 28 Sep 2003

UK: JJB Sports withdraw goods from Myanmar

JJB Sports, the UK's largest sports retailer, has announced that it is withdrawing stock manufactured in Myanmar, formerly Burma, and is to implement a policy to ensure stock will no longer be sourced from there.

The move followed publicity from the UK's Burma Campaign, which said that it had found Kappa shirts and shorts made in Myanmar at the company's flagship Oxford Street store. The group had threatened a boycott call in response to the find.

In a letter to suppliers, JJB said that it would extend its non-sourcing policy to "any regime that is currently considered to be oppressive" and that it would return any stock supplied from such countries.

"JJB have acted swiftly and responsibly, and deserve credit for doing so," said Yvette Mahon, Director of the Burma Campaign UK. "We hope this will increase pressure on Kappa to withdraw."

Antitrust suit to proceed against Monsanto

An antitrust lawsuit against Monsanto has been given the green light to go ahead by a US District Court judge. Other companies are also in the firing line, including DuPont, Bayer AG and Syngenta.

The suit is being brought by farmers who allege that the companies have conspired to fix prices on genetically modified seeds, specifically Roundup Ready soybeans and Yieldgard corn. The companies have denied the accusations.

GlaxoSmithKline clears way for new policy on pay-offs

GlaxoSmithKline has indicated that it is to move towards a remuneration policy for its executives that would avoid recent controversies over perceived pay-offs for failure.

The company has said it is strongly considering guidelines introduced by the UK's Association of British Insurers that essentially tell companies to avoid making the link between reward and failure.

The move follows GSK's achievement of an unhappy governance first earlier this year when it's proposed pay package for CEO Jean-Pierre Garnier was thrown out at its AGM. Investors were incensed at Mr Garnier's two-year notice period and the two years' pay and bonuses he would receive on leaving.

Malaysian Airlines says passengers want 'young and pretty' stewardesses

Air hostesses over the age of 40 have been grounded by Malaysian Airlines on the principle that passengers want to be served by 'young, demure and pretty stewardesses', according to media reports.

The company said that it had no intention of discriminating against women, but Mohammadon Abdullah, the general manager for corporate services, was quoted by the New Straits Times as saying: "Let's face reality. Customers prefer to be served by young, demure and pretty stewardesses, especially Asian ladies."

The employees union has begun a campaign against sex discrimination, pointing out that women must retire from flying by the age of 45 if they are supervisors, and by the age of 40 otherwise - 15 years earlier than their male counterparts.

China: Unsafe practices highlighted in firework plant explosions

According to the China Labour Bulletin, four separate explosions took place in fireworks factories in various parts of China in the space of a single week, leading to the death of at least 31 people. The report came as the State Administration of Work Safety reported that the number of fatal accidents in some industries has increased, in spite of government actions to seek to reduce these.

The recent explosions included one in Hebei province at the Guoxi Fireworks Factory, which killed at least 29 people, and was reported to have been caused by the ignition of gunpowder that had been spread out to dry in the sun.

The People’s Republic of China is the world’s biggest producer of fireworks. Firework factories are often small and locally owned, employing young people and often outsourcing production to small workshops in closely packed residential areas.

According to the Bulletin, although some factories pride themselves in producing high quality fireworks conforming to international safety specifications for export, little thought is often given to the safety of workers in the factories. The situation of work safety in the fireworks industry remains appalling and there are regular explosions which kill and maim dozens of people. In addition, because a great deal of firework production often involves child labour and takes place in the homes of individual villagers, the accidents often also kill and maim children who either live in the homes involved or work in the small workshops.

Australia: Workers have no faith in bosses

Around 52 percent of Australians have little trust in their employers, according to the results of a survey of 5,000 people by Kelly Services.

In addition, 47 percent of Australians believe that their employers do not have their best interests at heart - much more sceptical results than those of employees in New Zealand, Malaysia and Singapore.

Kelly Services managing director Garie Dooley said: "It is particularly disturbing that the actions of just a small number of companies and senior executives can impact on workers' morale and confidence and many other sectors".

Statoil CEO resigns over Iran corruption probe

Statoil has announced the resignation of its CEO, Olav Fjell, just days after the departure of its chairman, Leif Terje Loeddesoel, following the continuing uncertainty around the corruption probe into the company's contract with Iranian Horton Investment.

The controversy stemmed from links with Mehdi Hasemi Rafsanjani, son of Iran's former president. The contract has been revoked, but police are now carrying out investigations to see if the deal involved corruption.

The company said it was "important that a calmer atmosphere be established as quickly as possible in relation to the group, so that Statoil's development can continue."

The move marks the latest increase in pressure on oil companies and others to clean up their act in situations where previously they have been happy to deal with facilitation payments or bribes to win business.

India: Coca-Cola threatened with Kerala plant closure

Coca-Cola has been given two weeks to defend the continued operation of its bottling plant in Kerala, which has been dogged with accusations of over-using water and producing toxic waste.

The ultimatum has been issued by the village council of Perumatti, following ongoing complaints that have been reporting by the BBC's 'Face the Facts' programme alleging the company's operations have adversely impacted on those living in the vicinity.

The company insists that there is no such adverse impact, and that its operations are safe and within legal limits.

If the village council chooses to issue a closure notice, this will then need to be referred to the Kerala High Court before establishing its legal weight.

RJ Reynolds cuts workforce by 40 percent

Tobacco company RJ Reynolds has announced that it is slashing the size of its workforce, cutting approximately 2,600 full time jobs over the next year.

The huge proportion of job losses comes in response to the increasingly challenge to the tobacco giants of low cost cigarettes. Of the jobs being eliminated in the Winston-Salem area, about the company said that 75 percent were matched with employees who had expressed interest in leaving the company.

In a statement, the company said: "RJR and RJRT employees whose jobs are eliminated will be eligible for outplacement assistance and severance benefits, which are based on salary and length of service".

Merrill Lynch executives indicted for fraud over Enron

Three former Merrill Lynch executives, Daniel Bayly, James Brown and Robert Furst, have been indicted on fraud charges arising from the company's involvement with the scandal around Enron.

The company itself escaped prosecution after it accepted responsibility for the executives' actions. As part of the settlement, the company has agreed that an outside accounting firm will assure the integrity of complex financial transactions with clients.

The executives have all pleaded not guilty to the charges, which are connected with alleged actions to help Enron improperly boost its reported earnings.

Bayer succeeds in fending off Baycol class action move

German drugs and chemicals firm Bayer AG has won a key legal victory as a US Federal Court has denied a proposed class action on the impacts of the company's withdrawn drug Baycol.

The filing had sought to bind together over a thousand individual cases - a move that the company opposed on the basis that there were too many different issues to be able to qualify as a class action.

The company said that it intended to take a case-by-case approach, with the aim of achieving fair compensation for anyone who experienced serious side effects of using the drug. It will defend cases, however, where medical evidence does not support the claim for the drug's role in creating problems.

South Africa: BAT donation controversy for Cape Town University

The University of Cape Town has created a storm of protest from anti-smoking groups by accepting a R120,000 donation from British American Tobacco.

At least one senior member of the health faculty has sent a letter of protest to Vice Chancellor Njabulo Ndebele, complaining that the donation - given to fund a two-year scholarship programme - was tainted money.

British American tobacco said that it was giving the donation in its role as a corporate citizen of South Africa, and it was aiming to redress historical social imbalances.

The storm is very similar to that caused in the UK in 2001 when BAT donated money to Nottingham University for a department dedicated to corporate social responsibility.

Nike settles Kasky lawsuit

Nike has agreed to settle the lawsuit brought by Marc Kasky over claims that statements it made relating to conditions in some of its suppliers' factories constituted 'false advertising'.

The case had seen considerable interest in the potential legal precedent that would establish that companies have no protection under freedom of speech guarantees, and that everything they say can be challenged as commercial speech. In the event, the US Supreme Court refused to rule on this point, and now the settling of the case means that the legal merits of both sides remain untested.

Nike has agreed to pay $1.5m to the Fair Labor Association - an independent coalition that seeks to improve factory conditions and monitoring. In response, Kasky has agreed to withdraw the suit.

"The two parties mutually agreed that investments designed to strengthen workplace monitoring and factory worker programmes are more desirable than prolonged litigation," Nike said Friday in a statement announcing the agreement.

Former Enron treasurer jailed

Ben Glisan, the former treasurer of Enron, has been sentenced to five years in jail after pleading guilty to criminal conspiracy - making him the first Enron executive to be sentenced.

The conviction may influence the cases against some of the other Enron officers, including the former chief financial officer Andrew Fastow, who has been held to be the leading agent amongst the group of corrupt businessmen. Their actions led to the disgrace and fall of the energy trading company nearly two years ago.

The most high profile figure, Kenneth Lay - the former chairman - and CEO Jeffrey Skilling, have not been charged with an offence, although investigations continue.

CSR FEATURES from the Internet

Green Practices Offer A Competitive Edge - 28 Sep 2003 FROM The Financial Express

Besides being competitive, it is also imperative for the Indian industry to demonstrate corporate social responsibility. Becoming green and addressing environmental issues are steps towards this objective,” says Jamshyd N Godrej of the Godrej group.

“Many result-oriented organisations in India have initiated actions towards sustainability. They have in turn realised that investing in environmentally sound technologies reflects receptively in their balance sheets,” according to vice-chairman and chief executive officer of Dr Reddy’s Laboratories.

Read full story

Premiums up? Blame global warming - 27 Sep 2003 FROM Sydney Morning Herald

At this week's launch of a major report scrutinising the impact of corporate sustainability on a company's earnings IAG chief executive Michael Hawker set out in no uncertain terms how small changes in the weather directly affect the cost of insurance premiums.

Over the past 140 years, the cost and frequency of insurance claims have been steadily rising in line with global temperatures, Mr Hawker said. A 1 to 2.2 degrees celsius rise in temperatures can have a significant impact on the ferocity of natural disasters.

Read full story

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Corporate Social Responsibility in Asia - a tale of two conferences

Article by Mallen Baker

During the last week, we have seen the Asian Forum on CSR in Bangkok, and the Ethical Corporation Asia Conference in Singapore. You could not have had two more different events had one of them taken place on the moon.

The Asian Forum on CSR was a lively, well-attended event, with a broad spectrum of social campaign groups, public sector and businesses looking at a range of compelling stories and case studies of business engagement with some of the starkest issues facing Asia. This included programmes targeted on poverty alleviation, environmental improvement and AIDS. The conference operated through plenaries and a series of breakout sessions, including one stream where delegates nominated titles for the breakouts.

The event was completed with the first Asian Forum CSR Awards, that saw recognition given to companies that had demonstrated their commitment to CSR over the previous year in an event that included a speech on CSR by the Thai Prime Minister, Thaksin Shinawatra.

No attendance list was given, but the impression was that there were maybe one third businesses present. The focus was almost consistently on social programmes – the breakout that Mallen spoke at on communicating with stakeholders, and one other on labour issues, counted as the exception. The impression was given that there is a growing network of CSR organisations appearing across Asia – and these local partnerships are beginning to provide a focus for growing levels of corporate engagement.

On the other hand, Ethical Corporation had a smaller audience of around 100 delegates – but of these 75 percent were business. The presentations were nearly all from business – and were much more focused on corporate behaviour and performance. This included environmental performance, labour rights and supply chain management, stakeholder dialogue and reporting. It was the missing element from the Asian Forum – had the two been blended together into one event, you would have had a fully rounded representation of the different facets of CSR as they relate to Asia.

One striking feature of both, however, was the extent to which the business voices were the local representatives of multinational corporations. Coca-Cola, GAP, Philip Morris, Unocal, DHL, Standard Chartered – and many others. There were a few home-grown representatives – Sony talked eloquently about its values and approach at Ethical Corporation, the Tata Group was represented at the Asian Forum – but these were notable as exceptions. The suggestion seemed to be that CSR in Asia is currently the engagement of multinational corporations in their responsibilities to the region, and the impact on home grown companies of the supply chain pressure of said companies. Whether this is truly representative of the situation on the ground, or whether it simply reflected difficulties with the evolving language of CSR for home-grown companies is not clear.

So, what were some of the stories that came out? The first place to look must be the Asian Forum CSR Awards. These had five categories.

The category for Environmental Excellence was won by Nestle Philippines for its 'greening the supply chain’ programme. The programme, running over the last couple of years, set out from board level to encourage business partners to adopt environmental management. The company has now recruited 55 more of its 300 or so suppliers to join the scheme. The Greening the Supply Chain programme aims to encourage sound environmental practices, as well as realising economic benefits. Carton supplier Unibox Packaging Corp involved its workforce in devising an environmental management system that allowed the company to reduce waste by 8%, water consumption by 15% and energy consumption by 8%. Unibox is now seeking ISO 9001 and eventually 14001 certification.

Commended in this category were also Unilever Indonesia for its ‘sustainable, clean Brantas’ programme, and MTRC Hong Kong.

The winner of the ‘best CSR policies’ category was Union Cement Philippines. The company’s CSR policy focuses on education (providing scholarships, school facilities and equipment), livelihood (improving the family income and enhancing the quality of life of host communities) and infrastructure (supporting shelter programmes in various communities working in partnership).

There were commendations for Unocal Thailand and Central Azucarera de Don Pedro, Philippines.

The Education category was taken by Tata Consulting Services India, for its programme using computer programmes to eradicate illiteracy. Runners up were the Coca-Cola Foundation India, HSBC Philippines and IBM Computer Eyes programme.

The category for Poverty Alleviation was won by Hindalco Industries, with its programme focused on the adoption of villages in India. Runners up included Allen & Overy Hong Kong and Seylan Bank, Sri Lanka.

A special achievement award was granted to the long-running Philippine Business for Social Progress.

If there had been an award for the most compelling story, told in the most entertaining way, it would undoubtedly have gone to Senator Mechai Viravaidya, the founder and board chairman of Population and Community Development Association (PDA) of Thailand. He told the story of PDA, which runs programmes based on the belief that local people are best suited to shape and sustain their own development. It has been involved in the promotion of family planning (leading Mechai to become labelled as the ‘condom king’). 12,000 volunteers distributed condoms to over 16,000 villages. PDA programmes now cover one third of the country.

Other programmes have targeted water resource development, constructing sanitation facilities side by side with community awareness campaigns, making a real contribution to the reduction of the primary causes of poor health and parasitic infection.

Mechai has particularly been controversial for his passionate and consistant view that programmes work best that empower women to take a full role in the economic life of the villages, believing that they are often the most effective agents of change. When the time came for questions following his presentation, this was the first point to be questioned. “You have two arms”, he stated in response. “Why would you use only one of them?”

There is no doubt that the business attendees at the Ethical Corporation conference found more there of interest, however – given its emphasis on practical examples of how businesses manage their social responsibilities. So, for instance, Kean Chan talked about Sony’s approach to corporate citizenship, which included an impressive range of activities and commitments on sustainable development, including a zero waste to landfill policy and the development of eco-efficiency indicators.

The company is now well advanced in its approach to total lifecycle assessment for its products – work that was informed by the problems its experienced when the discovery of Cadmium deposits on its Playstation units led to dented performance during a key Christmas period.

The Asian Forum was more a celebration of the difference businesses can make – the companies there were inspired by some of the human stories, but may also have left thinking that CSR is all about philanthropy. For this to become a more rounded view, whatever form the Forum takes next year should incorporate more of the core business message promoted by Ethical Corporation – perhaps there could be a partnership there?

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In the news from the latest issue

Nepal: Relatives of killed workers sue US firm KBR for trafficking

US: Proposed Alaskan mine survives people's vote

Merck accused of dressing marketing up as science

Australia: Business lobby group warns over carbon trading

India: Tata Motors threatens pull-out from West Bengal

US: Climate change resolutions making impact on companies

Japan: Details of carbon labeling confirmed

Canada: Wal-Mart has union contract imposed

India: Rising protests against factory building

US: Fraud will cost firms $994bn this year

US: American Airlines accused of safety breaches

Ghana: Call for companies to help clear up electronic waste

US: Disneyland demonstration over hotel worker benefits

Uzbekistan: Major retailers call for end of child labour in cotton

... more news stories

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Business Respect - most recent edition added on 17th August 2008